In A Digital World, Growth In Banking ≠ More Banking Jobs

The correlation in banking sector growth and an increase in bank jobs may not hold in these times of digital banking.

An attendant helps a customer use an ATM machine outside a Citibank branch in Mumbai, India (Photographer: Vivek Prakash/Bloomberg)
An attendant helps a customer use an ATM machine outside a Citibank branch in Mumbai, India (Photographer: Vivek Prakash/Bloomberg)

There was a time when the image of the teller sitting behind the bars of cash window in a bank branch was synonymous with banking. But with time and technology, the job of the cash teller has becoming increasingly redundant.

Last week, Standard Chartered downsized its operations by a count of 200. Most of the jobs lost were in branch banking functions such as cash tellers, which have become less useful to banks in an age of digital banking. Standard Chartered is not alone. With payments, customer acquisition and now lending increasingly moving online, banks are reviewing the employment needs. The result is that while the banking sector, particularly private banks, continue to grow, banking jobs may not grow at the same pace.

Data is reflecting this shift.

In the early part of the decade, the increase in banking sector jobs was in sync with ups and downs in banking activity, as measured by advances growth. But in recent years, the correlation has broken down, shows data compiled by BloombergQuint. The data was collated from the Reserve Bank of India’s database. Data for bank employees comes with a lag and is only available till 2017.

With the move towards digital banking gaining momentum in the last few years, the correlation could weaken further.

“It is a fact that banking, financial services and insurance (BFSI) is among the hardest hit by automation and technological innovation,” said Rituparna Chakraborty, co-founder and executive vice president of human resources services provider, TeamLease. While TeamLease’s half-year employment trends report shows that the financial services sector is expected to add net jobs, there is a shift in the nature of jobs within banking.

In coming times, 35 to 38 percent of all existing BFSI jobs are likely to see a modification in profile. 25 percent of all jobs may be under threat even as absolute job growth is expected at near about 10 percent.
Rituparna Chakraborty, Co-Founder and Executive Vice President, TeamLease

Job growth has slowed across both public and private banks. However, since private banks have been moved towards digital banking more rapidly, the volatility in jobs offered by private banks has been greater, shows the data compiled by BloombergQuint.

An example of this was the country’s largest private lender HDFC Bank Ltd. The lender saw a reduction in its workforce in 2016-17, but grew it once again in 2017-18. The year that the lender had seen a reduction in jobs, it had attributed this to natural attrition in functions it felt no longer needed replacements.

Digitisation does not necessarily cause job loss, said Puneet Bhatia, who heads digital practise at executive search firm, Pedersen & Partners. Credit is a function of productivity and on account of higher productivity, banks may no longer require as many employees for incremental growth, he explained.

But a shift in the nature of jobs appears inevitable and is already visible in the numbers.

The RBI data shows a more significant fall-off in jobs at lower levels. Of the three categories that the RBI breaks-up bank employees into, the officers category has seen the smallest decline while the clerks and subordinates segment have seen a steeper fall.

There is a shift towards roles which require higher qualifications and a more specialised skill set, said Chakraborty. Hiring for manual processes has seen a slowdown, she added.

In the entire core operations of a bank, it is the repetitive jobs which get digitised, said Bhatia. With transactions increasingly becoming digital, the role of employees in retail bank branches in particular has undergone a change, he said.